Malaysia's Employees Provident Fund is trying to change how its members spend their savings at retirement, steering them toward i-Emas, an option that pays out a monthly sum instead of a single lump sum at age 55 or 60. Economists say the shift is overdue: one survey cited last week found about 97% of Malaysians took their EPF money in one go.

The debate matters well beyond Malaysia. The EPF, known locally as KWSP, had 18.5 million members at the end of June, according to The Edge Malaysia, and how its retirees draw down their savings shapes household spending, demand for annuities and insurance, and the fund's own cash needs. Prime Minister Anwar Ibrahim put i-Emas in his Budget 2027 speech on Oct. 9, and economists returned to the issue in a Malay Mail report on Nov. 5.

How EPF's i-Emas works

i-Emas is not a new scheme. It is a new name, adopted this year, for the monthly payment choice that already existed under the EPF's Age 55 and Age 60 withdrawals. More than 21,000 members had picked monthly withdrawals by May, the fund said when it introduced the brand, Free Malaysia Today reported.

Members choose a monthly amount of at least RM100 (or RM1,200 a year) and commit for at least 12 months. Payments can run until age 100, The Star reported. RinggitPlus, a personal finance site, said payments land on the 25th of each month and that members can take part of their balance as a lump sum and receive the rest through i-Emas. Applications go through the i-Akaun app, the web portal, self-service terminals or EPF branches.

The money left in the fund keeps earning dividends. The EPF declared 6.15% for 2025 on both conventional and Shariah savings, according to RinggitPlus, which noted that conventional savings carry a legal minimum return of 2.5% a year, while Shariah savings have none.

The arithmetic shows why the dividend matters. In RinggitPlus calculations that assume a 5% return and ignore inflation, RM100,000 drawn at RM1,000 a month lasts about 10 years and 10 months, against 8 years and 4 months with no return. A balance of RM200,000 lasts almost 36 years under the same assumptions. To fund RM1,000 a month for 20 years, a member would need about RM151,500 at 5%, or about RM188,700 at the 2.5% minimum.

Why economists want more than a drip feed

Lee Heng Guie, an economist quoted by Malay Mail, said many retirees who took lump sums used up their savings within three to five years. Structured payouts, he argued, encourage steadier spending while the untouched balance compounds. He also said fixed monthly sums can fall short when costs jump, from medical bills to inflation, and pointed to the EPF's Akaun Fleksibel (Flexible Account) for short-term needs.

Samsudin Kadir, another economist cited in the same report, said monthly payouts could help members with modest savings or little financial knowledge, but backed a hybrid: regular income plus limited lump-sum access for illness or other emergencies. Prof. Mohamad Fazli Sabri, dean of the Human Ecology Faculty at Universiti Putra Malaysia, made a similar case to The Star in October, calling i-Emas a possible “self-funded monthly salary” while urging uncapped withdrawals for genuine emergencies.

Stewart Nixon, director of research at the Institute for Democracy and Economic Affairs (IDEAS), took a wider view. Monthly withdrawals alone will not fix low retirement incomes, he told Malay Mail, calling for better returns, more investment choice for members, stronger financial literacy and a competitive, well-regulated annuity market. He added that a lump sum can make sense for retirees carrying high-interest debt.

The scale of the gap is visible in EPF's own benchmarks. RinggitPlus noted that the fund's Basic Savings level for a member turning 60 in 2026 is RM270,000, which at a 5% return would generate about RM1,125 a month. The EPF's Belanjawanku guide puts a single elderly person's living costs in the Klang Valley at RM2,690 a month, the site said.

What else Budget 2027 changes for EPF members

The budget also proposed automatic EPF registration for all Malaysian citizens at 18, replacing the current system in which membership starts with a first employer contribution, The Edge Malaysia reported. EPF Chief Executive Ahmad Zulqarnain Onn welcomed that step and the increase in the minimum wage to RM2,000, according to Bernama. The government's 20% matching incentive for e-hailing and p-hailing drivers under i-Saraan Plus continues, capped at RM600 a year and RM6,000 over a lifetime. Separately, the budget's income tax measures cover individual reliefs.

For members under 55, new contributions are split 75% to Akaun Persaraan, 15% to Akaun Sejahtera and 10% to Akaun Fleksibel. Akaun Sejahtera savings will be usable to pay premiums for MediAsas, a basic medical insurance and takaful plan due for nationwide rollout in January 2027, The Edge Malaysia reported.

The next figure to watch is the EPF's dividend for 2026, which will help decide how far each i-Emas payout can stretch.

This article is general information, not financial advice.